DAR File No. 28338

Natural Resources, Oil, Gas and Mining; Non-Coal

R647-2

Exploration

NOTICE OF PROPOSED RULE

DAR File No.: 28338
Filed: 11/09/2005, 12:29
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule change is to establish the procedural requirements for bonding exploration operations granted by S.B. 65, from the 2003 Legislature. (DAR NOTE: S.B. 65 (2003) is found at UT L 2003 Ch 35, and was effective 05/05/2003.)

Summary of the rule or change:

This rule change tells how bonds for the reclamation of exploration operations are to be estimated, submitted to the division, reviewed, changed, and forfeited.

State statutory or constitutional authorization for this rule:

Section 40-8-1 et seq.

Anticipated cost or savings to:

the state budget:

There may be an insignificant increase in administrative costs to the state budget. This would occur initially but as operators comply with the bonding requirements it will prevent future mine closures without bonds and thus prevent future costs to the state.

local governments:

Since local government rarely engages in mining operations, there will be little or no impact on these governmental entities.

other persons:

Other persons, such as bond issuing companies, may gain profit from issuing additional bonds to mining companies.

Compliance costs for affected persons:

Compliance cost increases to mining companies may be experienced because of the additional bonding requirements. The actual costs are approximately 1% of the amount of the reclamation cost estimate.

Comments by the department head on the fiscal impact the rule may have on businesses:

While this rule change could impose a financial burden on business, it provides a "safety net" that assures that the state is not left with unreclaimed mined lands. Michael R. Styler, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Ron Daniels at the above address, by phone at 801-538-5316, by FAX at 801-359-3940, or by Internet E-mail at rondaniels@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/25/2006

Interested persons may attend a public hearing regarding this rule:

12/07/2005 at 10:00 AM, Natural Resources Bldg, 1594 W North Temple, Suite 1050, Salt Lake City, UT and 1/25/2006 at 10:00 AM, Natural Resources Bldg, 1594 W North Temple, Suite 1050, Salt Lake City, UT

This rule may become effective on:

01/26/2006

Authorized by:

Ron Daniels, Coordinator of Minerals Research

RULE TEXT

R647. Natural Resources; Oil, Gas and Mining; Non-Coal.

R647-2. Exploration.

R647-2-101. Filing Requirements and Review Procedures.

1. Prior to the commencement of exploration, [A complete]a Notice of Intention to Conduct Exploration (FORM MR-EXP) [or a letter ]containing all the required information must be filed with and determined complete by the Division and the Division shall have approved the form and amount of reclamation surety.[the Division before exploration begins.] It is recommended that the notice of intention be filed with the Division at least 30 days prior to the planned commencement of exploration.

2. Within 15 days after receipt of a Notice of Intention to Conduct Exploration (FORM MR-EXP)[ or comparable letter], the Division will review the proposal and notify the operator in writing that the notice of intention is:

2.11. [That the notice of intention is complete]Complete and all required information has been submitted; or

2.12. [That the notice of intention is incomplete]Incomplete, and [that ]additional information as identified by the Division will be required.

[2.13. ]The Division will review and respond to any subsequent filings of information within 10 working days of receipt.

3. If more than five acres of disturbance are planned, a detailed exploration development and reclamation plan must be included in the notice of intention and approved by the Division.[A notice of intention to conduct exploration will not require Division approval, unless more than five surface acres of disturbance is proposed. However, all of the required information must be provided to the Division. Division approval is required for all variances from Rule R647-2-107, 108, or 109, regardless of the number of surface acres of disturbance planned.]

4. The Division will review and approve or disapprove:

4.11. The form and amount of reclamation surety, and;

4.12. Any variances requested under R647-2-107, 108, or 109, regardless of the number of surface acres of disturbance planned.[Exploration that will disturb more than five surface acres at any given time will require Division approval and a reclamation surety before exploration begins. (See Rule R647-2-111.)]

5. Developmental drilling conducted within an already approved disturbed area with approved surety[the disturbed area of an approved large mining operation or within the five acre disturbed area of a small mining operation] does not require submittal of a Notice of Intention to Conduct Exploration (FORM MR-EXP)[ or comparable letter].

6. A permittee's retention of a notice of intention shall require the paying of permit fees as authorized by the Utah Legislature. The procedures for paying the permit fees are as follows:

6.11. The Division shall notify the operators of record annually of the amount of permit fees authorized by the Utah Legislature for Exploration.

6.12. Fees are due beginning July 31, 1998 and thereafter annually, by the last Friday of July as authorized by the Utah Legislature.

6.13. A permittee may avoid payment of the fee by complying with the following requirements:

6.13.11. A permittee will notify the Division of a desire to close out a notice of intention by checking the appropriate box of the permit fees billing form.

6.13.12. The permittee will then arrange with the Division for an onsite inspection of the site to assure that all required reclamation has been performed. If an inspection reveals that an area is not yet suitably reclaimed, then a new billing notice will be issued and the permittee will be given 30 days from the date of the onsite inspection to pay the fee.[

6.14. All permit fees which remain uncollected 30 days after the due date will be turned over to the Utah Office of Debt Collection.]

R647-2-102. Duration of the Notice of Intention.

1. A [complete ]Notice of Intention to Conduct Exploration [or comparable letter]that has been determined complete or, for operations of more than 5 acres has been approved, shall be valid until November 30th of the year following the year of submittal. All exploration and reclamation activities should be completed within this time frame. An operator desiring to extend the duration of a notice of intention, must notify the Division in writing, prior to expiration of the notice of intention, specifying the reasons an extension is required, and the anticipated length of time required to complete exploration and reclamation.

2. The Division will review and approve the extension and adjust if necessary, the amount of reclamation surety.

3. Authorization to operate under a Notice of Intention to Conduct Exploration may be withdrawn in the event of failure[ Failure] by the operator to pay permit fees required by [R647-2-101(6)]R647-2-101.6, or to maintain and update reclamation surety as required, after notice and opportunity for Board hearing.[will suspend an operator's authorization to conduct exploration operations.]

R647-2-104. Operator(s), Surface and Mineral Owner(s).

The notice of intention shall include the following general information:

1. The name, permanent mailing address, and telephone number of the operator responsible for exploration.

2. The name and permanent mailing address of the surface land owner(s) and mineral owner(s) of all land to be affected by the operations.

3. The federal mining claim number(s), lease number(s), or permit number(s) of any mining claims, federal or state leases or permits included in the land affected.

4. A statement that the operator will conduct reclamation as required by these rules.

R647-2-105. Maps and Drawings.

[A topographic base map showing the location of the proposed exploration project must be submitted with the notice of intention. A USGS 7.5 minute series map is preferred. The areas to be disturbed should be plotted on the map in sufficient detail so that they can be located on the ground. It is recommended that the operator also plot and label any previously disturbed areas in the immediate vicinity of the proposed exploration project for which the operator is not responsible.]The notice of intention shall include a location map and an operations map. Each map shall be plotted at a scale to accurately identify locational landmarks and operation details.

1. The general location map shall be the scale of a USGS 7.5-minute series map or equivalent (1"=2000') and identify new or existing access roads.

2. The operations map (1"=200' or other scale as determined necessary by the Division) shall identify:

2.11 The area to be disturbed;

2.12 The location of any existing or proposed operations including access roads, drill holes, trenches, pits, shafts, cuts, or other planned exploration activities; and

2.13 Any adjacent previous disturbance for which the operator is not responsible.

R647-2-106. Project Description.

The notice of intention should include the following information:

1. A statement giving general details of the type or method of exploration proposed, including the proposed dates during which exploration will be conducted;

2. The type of minerals to be explored for;

3. The general dimensions of all drill holes, including total depth and diameter;

4. The general dimensions of all trenches, pits, shafts, cuts, or other types of disturbances;

5. The width and length of any new roads constructed;

6. An estimate of the total number of surface acres to be disturbed.

7. The amount of material (including mineral deposit, topsoil, subsoil, overburden, waste rock, or core hole material) extracted, moved, or proposed to be moved during the exploration operation.

R647-2-111. Surety.

1. [The operator of an exploration project that will result in more than five surface acres being disturbed at any given time must post a reclamation surety prior to commencement of exploration. Disturbed areas which have been reclaimed are not included within the cumulative five acres for purposes of the reclamation surety.]After receiving notification that the notice of intention is approved or complete, but prior to commencement of operations, the operator must post a reclamation surety with the Division.

1.11. Failure to furnish and maintain reclamation surety may, after notice and opportunity for a Board hearing, result in a withdrawal of the notice of intention as provided for in Section 40-8-16.

2. The Division will not require a separate surety where a reclamation surety in a form and amount acceptable to the Division is held by [the Division of Forestry, Fire and State Lands, The School and Institutional Trust Lands Administration, or an agency of the federal government]other governmental entities, provided that the cost estimate is accurate and the Division is named as co-beneficiary. Cooperative Agreements may be developed and entered into according to Section 40-8-22.

3. As part of the review of the notice of intention, the Division shall determine the required surety amount based on:

3.11. [site]Site-specific calculations or estimates by the Division reflecting the cost the Division['s] or a third party would incur[cost] to reclaim the site[.];

3.12. Site-specific calculations or estimates by the operator reflecting the cost the Division or a third party would incur to reclaim the site, if accurate and verifiable by the Division; or

3.13. The average dollars per acre costs for reclamation for similar operations, as determined by the Division, based upon approved surety amounts for current large mining operations.

3.14. In determining or verifying the amount of surety under Sections 3.11 or 3.12, the Division shall use cost data from current sureties for large mining operations, adjusted as necessary to reflect the nature and scope of operations and reclamation under the notice of intention.[An operator's reclamation estimate will be accepted if it is accurate and verifiable.]

4. The operator shall submit a completed Reclamation Contract (FORM MR-RC) with the required surety. The form and amount of the reclamation surety must be approved by the Division. Acceptable forms may include:

4.11. A corporate surety bond from a surety company that is licensed to do business in Utah, that is listed in "A.M. Best's Key Rating Guide" at a rating of A- or better or a Financial Performance Rating (FPR) of 8 or better, according to the "A.M. Best's Guide". All surety companies also will be continuously listed in the current issue of the U.S. Department of the Treasury Circular 570. Operators who do not have a surety bond with a company that meets the standards of subsection 4.11 will have 120 days from the date of Division notification after enactment of the changes to subsection 4.11 to achieve compliance or face enforcement action. When the Division in the course of examining surety bonds, notifies an operator that a surety company guaranteeing its performance does not meet the standards of subsection 4.11., the operator has 120 days after notice from the Division by mail to correct the deficiency, or face enforcement action;

4.12. Federally-insured certificate of deposit payable to the State of Utah, Division of Oil, Gas and Mining;

4.13. Cash;

4.14. An irrevocable letter of credit issued by a bank organized to do business in the United States;

4.15. Escrow accounts[.]; and

4.16. [In addition, the]The Board may accept a written self-bonding agreement in the case of operators showing sufficient financial strength.

5. Surety shall be required until such time as reclamation is deemed complete by the Division. The Division shall promptly conduct an inspection when notified by the operator that reclamation is complete. The full release of surety shall be evidence that the operator has reclaimed as required by the Act.

5.11. A partial release of surety can be made by the Division if it determines that a substantial phase or segment of reclamation such as demolition, backfilling or regrading has been successfully performed and the residual amount of retained surety is determined to be adequate to insure completion of reclamation.[

6. Adjustments or revisions made in the surety amount shall be in accordance with the terms and conditions outlined in the Reclamation Contract.]

R647-2-112. Failure to Reclaim.

If the operator fails or refuses to conduct reclamation as outlined in the complete notice of intention, and comply with the requirements of R647-2-107, R647-2-108, or R647-2-109 the Board may, after notice and hearing, order that:

1. [reclamation]Reclamation be conducted by the Division,[ and that:]

[1]2. The costs and expenses of reclamation, together with costs of collection including attorney's fees, be recovered in a civil action brought by the attorney general against the operator in any appropriate court; [or]and

[2]3. [The]Any surety filed for this purpose be forfeited. With respect to the surety filed with the Division, the Board shall request the Attorney General to take the necessary legal action to enforce and collect the amount of liability. Where a reclamation surety [or a bond ]has been filed with [the Division of Forestry, Fire and State Lands, The School and Institutional Trust Lands Administration or an agency of the federal government]other governmental agencies, the Board shall notify such agency of the hearing findings and [request that the necessary forfeiture action be taken]seek forfeiture concurrence as necessary.

3.11. The forfeited surety shall be used only for the reclamation of land to which it relates, and any residual amount returned.

R647-2-114. Revised Notice.

1. Minor additions or changes in the location of exploration operations do not require the submittal of a revised notice of intention. A new or revised Notice of Intention to Conduct Exploration (FORM MR-EXP) [or comparable ]letter must be submitted when:

1.1. The proposed additions or changes will occur outside the originally designated legal subdivision[quarter section]; or

1.2. For exploration operations under 5 acres the proposed additions will cause the total unreclaimed surface disturbance to increase by more than 1 acre or exceed 5 acres; or[The proposed additions will cause the total unreclaimed surface disturbance to exceed five (5) acres.]

1.3. For exploration operations over 5 acres, the proposed additions or changes will cause an increase in the area of disturbance previously approved.

2. In the event the Division or the operator determine at the time a revision is submitted that the amount of the current surety does not accurately reflect the potential cost to complete reclamation at any particular point in time during the revised exploration operations, the Division may undertake a recalculation of the surety amount as provided in R647-2-111.3. If the recalculated amount is greater than the amount of the existing surety, the revised operations may not be implemented until a revised surety is filed with the Division.

R647-2-115. Reports.

On or before December 31st of the year of filing of a Notice of Intention to Conduct Exploration (FORM MR-EXP) [or comparable letter, ]the operator must submit a Mineral Exploration Progress Report (FORM MR-EPR), which describes any unusual drilling conditions, water encountered, hole plugging measures, and reclamation activities conducted.

R647-2-116. Practices and Procedures; Appeals.

The Administrative Procedures, as outlined in R647-5, shall be applicable to minerals regulatory proceedings.

KEY: minerals reclamation

[October 1, 2001]2006

Notice of Continuation July 8, 2003

40-8-1 et seq.

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Ron Daniels at the above address, by phone at 801-538-5316, by FAX at 801-359-3940, or by Internet E-mail at rondaniels@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.